11% per capita revenue increase

The Allen Elizabethan Theatre. Featured is the set of
OSF’s 2013 production of A Midsummer Night’s Dream.
Photo by T. Charles Erickson.

The Situation:

In 2011, Oregon Shakespeare Festival (OSF) faced a crisis. During a performance of Measure for Measure in the Angus Bowmer Theatre, staff members heard an odd noise. They discovered a large crack one of the main ceiling beams in the theatre. As a result, the Angus Bowmer Theatre, one of OSF’s three venues, had to close for repair just as summer (the most in-demand time at the festival) was beginning. The marketing team decided to refund tickets if patrons did not want to attend shows in the other venues, as a part of OSF’s ongoing commitment to excellent customer service. The refunds contributed to a 27% drop in single ticket units and an 8% drop in overall admission revenue.

“Throughout the crisis, customer experience was our main concern. We based virtually every decision we made on how it would affect our patrons’ long-term relationship with OSF,” Mallory Pierce, OSF’s Director of Marketing and Communications, said.

Historically, the Oregon Shakespeare Festival was financially and organizationally strong. Sound budgeting and fiscal management procedures combined with generally strong attendance enabled the organization to grow even during the Great Recession with performances regularly sold at greater than 80% capacity.

After the 2011 beam break, the Festival wanted to become more resilient and sustainable. Pierce hired TRG for Capacity Building consulting, specifically on pricing, scale of hall, and patron loyalty.
Initial analysis found the following issues:

Scale plan led to unevenly filled theatres

With a high average capacity sold, many of OSF’s performances looked full. But lower demand performances filled in undesirable patterns. Seats at the highest price level and lowest price level tended to sell first. The scale plan at the time placed the lowest prices in the back of the venues, and the highest priced seats in front, which left visible holes in the areas of the theatre with mid-level price points.

Pricing strategy out of sync with demand

Per ticket revenue (or average ticket price) should increase for the best-selling seasons, performance dates, and productions—those in greatest demand. TRG analysis found that OSF had not yet achieved that relationship between high demand and high per ticket revenues. For example, the highest sold production in 2010 did not generate the highest per ticket yield of the year. If it had, OSF would have realized nearly an additional $292,500 in revenue.

Discounting incentivized late buying

OSF offers 12-month rolling memberships where patrons receive a discount 40% in fall and spring (times of year when demand is lower). Other than dynamic pricing increases, there was no incentive for members to buy early. Additionally, OSF often used single ticket discounts to push last-minute sales. Sometimes, these last-minute discounts were a better deal than the 40% given to members.

The Results

Ticket revenue has broken all previous records and is up 21% from 2011. Member admissions are also at an all-time high.

Per capita revenue is the highest it has ever been after an 11% per capita revenue increase over the last couple of seasons.

How They Did It

Making the house look good

Even with productions typically selling at 80%, TRG recommended a new scale of hall plan that anticipated OSF actively managing ticket inventory. The goal was to make houses look fuller to the audience, as well as the actors on stage, while maximizing revenue for higher-demand plays.

The new scale plan moved the lower price points closer to the stage; this stopped price-sensitive patrons from concentrating in the back and leaving areas of empty seats in front of them. TRG also recommended a hold-and-release inventory strategy. OSF had previously put all tickets on sale at once. Holding some seats back helped the hall fill front to back. Since the highest price points were some of the first to sell out, the new scale plan increased the price and the number of these “A+” level seats. This contributed to the increase in per capita revenue.

Open to the sky, the outdoor Allen Elizabethan Theatre seats 1,200 people.
Featured in the photo is the 2009 set and ensemble in Henry VIII. Photo by Jenny Graham.

“The new scale of hall plan and the inventory management system dramatically improved the experience for our audiences and our actors,” Pierce said.

Adjusting dynamic pricing and peak demand pricing strategy

In addition to the increase in “A+” level seating, OSF flattened price points and simplified its pricing structure. OSF had previously implemented different prices for weekdays and weekends, which made pricing more complex, and often didn’t match demand. TRG’s experience aligned with OSF’s data; off-peak pricing was not motivating behavior. Patrons who chose those nights did so because it worked best with their schedule, not because the tickets were cheaper.

A closer look at the best selling production from 2010 vs. 2013 (chart, right) demonstrates how the flattening the night of week pricing did not negatively impact weekday demand; in fact, units and average ticket price (also known as per capita revenue) increased.

TRG also tailored prices in each venue to match demand. OSF’s Thomas Theatre is a small venue in which “A+” level seats did not sell well historically, so TRG proposed removing that price point. OSF then raised the “A” level seat price, now the top price in Thomas, slightly above the “A” level price in the other venues to maximize revenue.

Discounting strategically

OSF’s data indicated that discounting strategy had negatively impacted per capita revenue and was not incentivizing people to buy early. OSF made changes to their discount strategy for members, as well as single ticket buyers.

Loyalty at OSF was strong because of the excellent membership program. The 40% discount on spring and fall tickets was reported to be a huge motivator for many members to attend and give. However, this large discount also impacted OSF’s revenue. Consultants recommended running the 40% discount only on tickets purchased prior to March and then dropping the discount to 20%. This change in discounting led to an increase in the percentage of member tickets sold early (prior to March). In 2010, 65% of member tickets were sold November—March and in 2013, 71% were sold in that same time period. Additionally, more member tickets were sold in that time period (up nearly 13,500).

Additionally, OSF changed its rush ticket price to a flat $45 fee instead of 50% off any ticket. This change was made to ensure that membership had the highest discounts and best value, rather than incentivizing last-minute buying. OSF was concerned that the new pricing would garner complaint—and it did initially. But there was no negative impact on units sold (57 more rush tickets were sold in 2013 than 2010) and per capita for rush tickets increased 35%—resulting in an extra $62,000.

About Oregon Shakespeare Festival

The Oregon Shakespeare Festival is a not-for-profit professional theatre founded in 1935. Their season runs from February through early November in three theatres: two indoor stages, the Angus Bowmer Theatre and the Thomas Theatre, and the flagship outdoor Allen Elizabethan Theatre, which opens in early June and runs through mid-October. OSF offers 11 different plays that include three or four by Shakespeare and seven by other classic writers, as well as modern and contemporary work and world premieres. More information at www.osfashland.org.